Horizon Organic Holding Corp. (Nasdaq: HCOW), the world’s leading producer of organic dairy products, announced yesterday results for its third quarter and nine-month period ended September 30, 2001. Net sales for the third quarter rose 17 percent to $39.0 million, versus $33.4 million for the comparable period a year ago. Net income was $592,000 versus $277,000 for the same period last year while earnings per diluted share for the third quarter of fiscal 2001 doubled to $0.06 compared with $0.03 in the third quarter of last year.
For the nine-month period ended September 30, 2001, net sales reached $115.2 million, up 29 percent from $89.4 million in the first nine months of 2000. Net income for the first nine months of fiscal 2001 was $799,000, or $0.08 per diluted share, compared with $1.1 million or $0.11 per diluted share in the same period a year ago.
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“The third quarter was very significant for Horizon Organic and clearly demonstrates the company’s ability to achieve substantial profit growth as well as continued sales growth. Our earnings doubled over the same period a year ago and U.S. sales rose 27 percent, indicating that the five-point plan we put in place is having a very positive impact. The strong results can be attributed in part to expanded distribution, the successful introduction of new products and increased productivity and cost reductions,” said Chuck Marcy, president and chief executive officer of Horizon Organic.
Distribution gains in the third quarter were extensive. In October 2001, the company reported that approximately 1,000 Starbucks locations nationwide now sell several flavors of Horizon Organic yogurt. Additionally, Kroger continued to add Horizon Organic managed organic dairy sections to stores in Detroit, Columbus and Roanoke. Albertson’s is now selling Horizon Organic milk in its stores throughout the Southwest and Super Target has selected Horizon Organic as the organic category captain for 52 Midwest stores.
The popularity of the Horizon Organic repackaged line of cheese, introduced earlier in the year, continues to reinforce the company’s leadership position, posting a 57 percent sales increase year-to-date. The company also recently introduced a new line of flavored organic single-serve milk products. The Horizon Organic branded “Organic Milk on the Moo-ve,” will be on the shelves in supermarkets in January 2002. In the U.K., the company is expanding the very popular Rachel’s Organic brand beyond yogurt to other products and began shipping organic butter this month. Distribution of Rachel’s yogurt products was also expanded in Tesco, the U.K.’s largest supermarket chain.
The gross margin during the third quarter reflects the success the company is experiencing with its productivity improvements and cost reductions. The 32.1 percent gross margin is a 1.3 percentage point improvement compared to the third quarter last year. Most significantly, the company’s new enterprise-wide information system has been in place for a month and is operating smoothly. This new system tracks products from farm to processor to retail outlet and provides the tools necessary to enhance efficiency and further reduce costs.
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By GlobalData“We are pleased with third quarter results and very excited about the future. The company clearly has the foundation in place to continue generating aggressive profitable growth. As a result, we have made the decision to invest now in the future of the company. We began a limited advertising campaign in the third quarter and will roll out a more aggressive program in 2002. Additionally, we will be recruiting a corporate development leader who will be charged with identifying new product lines beyond the dairy case, for possible introduction as early as next year,” Marcy concluded.
The company also said that it is comfortable with analyst consensus estimates of $0.09 per share for the fourth quarter of fiscal 2001 for a total of 17 cents per share for the year. The company also expects even stronger earnings growth in 2002 with earnings per share in the range of $0.32 to $0.39, while at the same time making substantial investments in the future of the business. This range includes the positive impact of a change in goodwill accounting rules which the company estimates should be $0.08 to $0.12 per share next year.
Horizon Organic produces and markets the leading brand of certified organic milk and a full line of refrigerated, certified organic dairy products. The company also markets certified organic eggs and juices. The company’s products can be found in conventional supermarkets and natural foods stores across the U.S. and in the U.K. For more information, please visit the Company’s web site at www.horizonorganic.com.
Note on Forward-Looking Statements: This news release contains forward-looking statements that involve risks and uncertainties. Future events may differ materially from those discussed herein, due to a number of factors, including uncertainties related to the company’s ability to continue strong growth, to achieve distribution and operational efficiencies, and to expand domestically and internationally, as well as increased milk costs, inbound and outbound freight and distribution costs, higher costs related to new-product introductions and increased personnel costs. These factors and others are more fully discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2000.
HORIZON ORGANIC HOLDING CORPORATION
SELECTED FINANCIAL DATA
(In thousands, except per share data)
Three Months Ended September 30,
2001 %NS 2000 %NS
Net sales $39,009 100.0% $33,392 100.0%
Growth vs.
prior year 16.8% 46.5%
Cost of sales 26,470 67.9% 23,093 69.2%
Gross profit 12,539 32.1% 10,299 30.8%
Selling expense 7,900 20.3% 5,939 17.8%
General and
administrative 1,947 5.0% 2,077 6.2%
Goodwill Amortization 817 2.1% 824 2.5%
Operating income 1,875 4.8% 1,459 4.4%
Interest and other,
net (888) -2.3% (1,005) -3.0%
Pretax income 987 2.5% 454 1.4%
Income tax expense (395) -1.0% (177) -0.5%
Net income 592 1.5% 277 0.8%
Earnings per share
Basic $0.06 $0.03
Diluted $0.06 $0.03
Weighted average
shares outstanding:
Basic 10,068 9,814
Diluted 10,333 10,078
Nine Months Ended September 30,
2001 %NS 2000 %NS
Net sales $115,214 100.0% $89,419 100.0%
Growth vs.
prior year 28.8% 49.5%
Cost of sales 79,475 69.0% 60,490 67.6%
Gross profit 35,739 31.0% 28,929 32.4%
Selling expense 23,191 20.1% 17,752 19.9%
General and
administrative 5,869 5.1% 6,097 6.8%
Goodwill Amortization 2,453 2.1% 1,725 1.9%
Operating income 4,226 3.7% 3,355 3.8%
Interest and other,
net (2,881) -2.5% (1,521) -1.7%
Pretax income 1,345 1.2% 1,834 2.1%
Income tax expense (546) -0.5% (736) -0.8%
Net income 799 0.7% 1,098 1.2%
Earnings per share
Basic $0.08 $0.11
Diluted $0.08 $0.11
Weighted average
shares outstanding:
Basic 9,972 9,782
Diluted 10,136 10,051
Selected Balance
Sheet Data Sep 30, Dec 31,
2001 2000
Working capital $21,218 $23,714
Total assets 129,473 132,164
Current liabilities 26,594 25,245
Long-term debt,
less current portion 40,547 45,685
Stockholders’ equity 59,738 58,644
